Indian billet export activity has remained quiet with Indian mills not submitting firm offers over the past week, even as they are assessing options of increasing overseas sales of semis, exempted from the export tax. The workable deal price is expected to be lower than mills are ready to give so far, SteelOrbis learned from trade and industry circles on Wednesday, June 1.
Ex-India billet prices are at $590-620/mt FOB, based on rare offers and the highest possible bids, but no deals were reported in the market and even government-run mills, the most active exporters of semis, have remained out of the market.
“Bids for the RINL tenders have been at $570-575/mt FOB for export, but no deals as they are below the mill's expectation,” a trader said. Other sources said that offers would hardly be below $620/mt FOB for BOF billet.
Sources said that private integrated mills which generally have lower exposure to exports of semis are still assessing the impact of the export tax on finished steel and resultant surpluses, and options to cut output accordingly.
If cutbacks in output are not viable after factoring in fixed operational costs, mills will be seeking to increase export allocations for semis including billets, exempted from export tax.
However, at least two officials at private mills said that, considering that other major billet exporters are facing extreme pressures from buyers and most markets including China are facing oversupply of imports, Indian mills will have to seek workable deals below $600/mt FOB.
“With more Indian mills entering semis exports, there is going to be a lot of increased competition for ever fewer buyers in the key markets of China and the Middle East. We do not rule out price realizations as low as $570-590/mt FOB going forward. It will depend on the efficiencies of each mill whether margins from such sales remain positive,” an official with a government-run mill said.
“For some mills, selling overseas even at negative margins might be essential to maintain optimal capacity utilization levels of mills as the domestic market will not be able to absorb all the oversupply of semis and finished products,” he said.
The pessimism over local sales has been compounded by the continued slide in billet trade prices in the local market. Trade prices lost INR 500/mt ($6/mt) to INR 48,500/mt ($625/mt) ex-Mumbai and are down INR 1,000/mt($12/mt) to INR 45,400/mt ($585/mt) ex-Raipur in the central regional market.
$1 = INR 77.60
